Ideas on Energy is pleased to have Tom Boyd of Nokero as a guest blogger. As Nokero reaches it’s one year anniversary as a company, Tom and the rest of the team have been thinking deeply about how to scale solutions to the global challenge of energy poverty.

The internet is alive with stories of successful renewable energy projects in developing countries. Clicking from one site to the next, it’s clear there’s a groundswell of support for solar, wind, biomass, geothermal, and other solutions the off-grid regions of the world.

Either way, the reality is that only a sliver of the world’s energy poor are making the giant leap forward to a clean energy economy. Billions remain trapped in a dark era, forced to pay exorbitant prices for out-dated fuels which perpetuate their poverty by leaving them unhealthy, broke, and in constant danger.

The solutions exist – so why aren’t these solutions being adopted on a larger scale? Sure, our industry has a lot to be proud of, and many communities around the world are currently benefiting from safe, clean, renewable energy projects. But how do we go big? How do we go from helping a million or so, to helping billions? How do we take half the planet’s population and leap-frog them forward, past the industrial revolution, and into a new, green energy economy that can truly and reliably sustain the needs of billions?

At Nokero, we are fast approaching the one-year anniversary of our foray into providing highly-economical solar lighting – and we feel our solar light bulbs are humanity’s best chance to end the practice of burning kerosene. We’ve also added a Power Panel which can charge phones, and have many other innovative products coming out in 2011.

A good product line is just the start. A workable business model is perhaps more important – and in some ways more of a challenge – than building good products. By way of retrospection, I outline below the four basic approaches that we are trying in our effort to make inroads to the developing world, and our analysis of each of these solutions.

Method – The Small Enterprise Approach: Hardly a day goes by at Nokero where we don’t discuss Paul Polak and his book, “Out of Poverty”. His book is one of the first to outline the benefits of Social Entrepreneurship. Polak and others (like “Philanthrocapitalism” author and Economist Bureau Chief Mathew Bishop) have inspired us to look for “Market Based Solutions” to develop micro-economies in each of the villages where our products end up.

Benefits: On the purely social level, we believe market-based microfinance solutions are an ideal way forward. Early results from projects in Columbia, Liberia, and Guatemala show that the small-business approach works very well, and demand for a reliable all-in-one solar light is high (part of this, we believe, is because Nokero’s bulb shape makes our bulb a desirable and recognizable household item). During one test project in a small town in Guatemala an entire gross of bulbs sold out in 8 hours.

Our vendors benefit financially from the sale of Nokero products, bringing wealth to their communities, and our small-business partners are in the early stages of building a growing business.

Small-businessmen also provide us valuable feedback on the product’s pros and cons, including customer reactions. They are building an economy around their work, and they are close enough to their communities to collect parts for recycling when the products lifespan is over (for the Nokero bulb, this may be 5-10 years if the product is well-cared for).

With “feets on streets,” renewable energy companies can create a healthy, lively, business network full of tremendous potential for all involved.

Challenges: Growth will be slow. Setting up and maintaining many thousands of micro-enterprises takes many years of hard work, and excellent communication across sometimes vast cultural gaps. While the parent company can incentivize the process and even set up the initial funding for investment, the initiative must, by definition, come from the vendors on the ground in each location. Also, market solutions must work – and sometimes finding a workable micro-business idea can be the greatest challenge. Not every vendor who pitches a tent will have success.

Method – The government subsidy approach: “States, as great engines, move slowly,” said Sir Francis Bacon in a quote from 1605, and the old saying holds true today. At Nokero, we are working with several “great engines” at home and abroad to make large-scale projects. While projects in Africa and Central America, in particular, show great promise, none has come to completion as of yet.

Benefits: Governments in the developing world (and often in the developed world, too) have the kind of buying power necessary to take solar power to the next level. Building infrastructure to supply grid-electric light to the people who need it can cost tens of billions of dollars. Solar and renewable solutions, by comparison, are relatively inexpensive.

One of our government partners, for example, showed that the government AND the people can save hundreds of millions simply by foregoing the process of building a traditional electrical infrastructure, and instead supplying off-grid solutions like Nokero to their people. Like choosing cell phones over land lines, the initial investment is smaller while results are essentially similar. The end result is governments can help raise their people out of poverty, supply them with the energy they desire, and help reduce carbon emissions all with a few well-run renewable projects.

Challenges: If a government buys solar power and gives it away to the people, there is a risk that the end-users won’t appreciate the value of what they’ve been given. A large government give-a-way doesn’t fit well with the ideals of Paul Polak and Mathew Bishop. Furthermore, while governments usually have the best motives in mind, the reality on the ground is that large-scale giving campaigns can often be subject to corruption. And, as Sir Francis said, the government process is sometimes – but not always – painfully slow and cumbersome in comparison to market solutions.

Method – The partial government subsidy approach: In this model,governments subsidize a portion of the cost of a solar or renewable system. This makes the product affordable to the poor, yet allows them the dignity of buying, owning, and knowing the value of the product for themselves.

Benefits: As in the above method, the benefits of working with a government are clear. They have the buying power and the desire to improve their energy economy. By only partially subsidizing a renewable project or product, a government can save money while simultaneously instilling a sense of value in the community.

In one of Nokero’s projects, our bulbs will be available in special stores only accessible by the very poor. If the project is approved sometime later this year, these customers will be able to afford Nokero products at a reduced cost. An in-depth study recently completed by the government of that country shows that the Nokero bulb pays for itself in 15 days – even without partial subsidy. With subsidy the product makes obvious economic sense.

Challenges: Subsidies are a tool for getting an industry started, but if an industry is to sustain itself in the long-term, it should learn to thrive without subsidies. Government price control can often dampen the innovation wrought by a free-market: for example, if a sub-standard product is subsidized it will have an advantage over another product which may be superior.

Method –Corporate, big-business approach:Corporations, like governments, have big-time buying power. Properly motivated companies are looking for ways to enter into developing markets, and renewable energy offers a great opportunity to do so.

Benefits: Big Corporations know how to move a lot of product, cut margins, and increase efficiency. They have the wherewithal and skill to market products well, attract media attention, and motivate the buyer. The mass buying power of a corporation is often the strongest tool in lowering factory costs. Lower margin is compensated by high-volume – and the energy poor may have their best chance at affording a product when it is mass distributed by a corporation.

Nokero is in various stages of partnering with several large, well-known companies to attempt large-scale distribution. It takes great vision for a large company to see the benefit of engaging in renewable energies in developing regions, yet some are following that path. Like Honda, which grew from a tiny company in Japan after WWII, to a household name decades later, it’s possible that companies like Nokero will start out in fringe markets and grow to become big-business themselves.

Challenges: Corporations are struggling to create efficient distribution networks into developing regions. The reasons are manifold, and well documented , in this seminal publication on emerging markets by the Monitor Group.

Social entrepreneurs are well-versed in the myriad stories of failure from markets around the world: Poor areas lack infrastructure, making distribution costly and difficult, which raises prices. Customers must also be educated as to the reasons why they should adopt a new system when they are economically and culturally adapted to an older technology. Even if the public is willing to buy, profits on inexpensive items are slim, and business can be difficult.

In the end, it’s a long, long way from the corporate board room to a village kiosk in an off-grid, rural region, and the cultural chasm can be vast. For many corporations, the journey into emerging markets simply isn’t worth it. Big-business doesn’t always mean big happiness. For small companies the game usually isn’t just about growing into a massive multinational. As Jennifer James points out, success is the quality of the journey.

At Nokero, we are open-minded to all of the above solutions, and we are trying each of the various approaches above to see what works best and where. No matter which method wins out, we are confident that the coming years will see a vast increase in renewable energy market solutions globally. In the end, it’s not terribly important what methods prove most resilient, which companies succeed and which fail. What matter is that the world’s energy poor make the giant leap forward to a green economy – and if we can succeed in this goal, all of us will reap the benefits.

A man loads solar panels on to a donkey. This is the "last mile" for energy distribution in many parts of the world and part of the solution for energy poverty.

Ideas on Energy is thrilled to have E+Co Co-Founder and CEO Christine Eibs Singer as a guest blogger this week. She recently traveled to Abu Dhabi to attend the World Future Energy Summit and accept an award on behalf of her organization for the great work they have done to address the global challenges of energy poverty and climate change. Christine noted on E+Co’s blog that there were not many other organizations at the event “focused on small scale clean energy solutions for the developing world.” In the entry below she reflects on why that was and how to address the challenge of energy poverty globally.

When one thinks about investing US$100 billion dollars in clean energy, visions of large wind turbines and hectares of solar panels dance through the mind. It is rare to find an investor whose dreams meander outside this box, to the rural communities and households that comprise the gaps in the grid, to the enterprises that can provide an answer to global energy poverty through the production and distribution of small scale solar systems, mini-hydro plants, household biogas units and fuel efficient cook stoves. It’s even rarer to find those who have actually pursued those investments.

This was the challenge I faced as a participant in the World Future Energy Summit in Abu Dhabi last month. The exhibit space was packed with large scale technologies. Deals were in the making, almost all of which were $500 million and up. So, when the UN Secretary General opened this summit with an address that set forth a vision of universal access to modern energy services, at a price tag of US$35 billion per year, I recognized the sharp disconnect to the equipment on display and the transactions being negotiated. This disconnect was further emphasized when Ditlev Engelhead of Vestas accepted the Zayed Future Energy Prize on behalf of their 22,000 staff, and I accepted on behalf of E+Co’s 48 staff.

Of course, the equipment on display and those deals being made are critical to meeting climate and energy challenges. But there’s more that has to happen. There are more than two billion people who live in energy poverty who have yet to benefit from the commercial and grid installations that filled the floors of the forum.

Energy poverty is a disease. Like malaria, polio and dengue it innately affects a person’s ability to live fully. But like these diseases, it can be treated. The equivalent of cures and vaccines exist, and the path to providing diagnosis, prescription and treatment has been paved over the last decade by battalion of companies, including small “powerhouses” such as E+Co, SELCO-India, Tecnosol, SELF, Toyola, AIDG, Winrock International, Barefoot Power, PowerSource Micro-Grid and D-Light.

The challenge to administering these treatments is the very scale of the disease: more than 400,000,000 households are infected; one-fifth of the world’s population endures the symptoms of energy poverty. As is often the case with widespread diseases, the cures for energy poverty are known. It is their dissemination and distribution, combined with the scale of the disease that makes the situation seem intractable.

E+Co’s 16 years of experience has shown that curing energy poverty requires that each infected household have access to just a few things: basic electricity for light and low-power appliances such as a cell phone; modern fuel and a stove for cooking; and small amounts of motor power for water pumping, sewing, grinding, husking, or other income improvements. Amazingly, the “cure” costs as little as $250 per household.

But to capture the interest of many of the investors I met in Abu Dhabi, one would need to package the cure for at least 2 million households in one fell swoop. But for E+Co and a few others, this bundling has not been attacked and few are willing to take on the high transaction costs that result from packaging tens of thousands of households, despite the financial, social, and environmental impacts that result. That is why I walked the exhibit aisles at WFES alone.

When E+Co began its work in the underdeveloped clean energy enterprise finance sector in 1994, no one else was focused on enterprises as a vehicle of delivering clean energy to combat poverty and climate change. While still relatively unique in our singular focus, we are now joined by others who see the market and impact opportunities for small and growing clean energy businesses in the developing world. They enter from the technology window; or focus on the productive uses and income that will result. Some are driven to create more equitable payment schemes for the energy poor or to reduce the health and deforestation impacts. Still others are here because they know the social equity possibilities that can result from energy access. But when the bottom line is drawn, all are here because they know the market and business possibilities exist. We know this because households at the base of the pyramid now spend $38 billion a year on dirty, fuel based lighting[1].

Our challenge is to bundle the energy access needs – to “scale” to 2 million households in a single transaction, while unbundling the capacity building and large scale finance to replicable efficient interventions. Those that have the experience to make this happen are out there, but like the cures to energy poverty, we too are decentralized.

Our most recent “back of the envelope” estimate is that we need 80,000 enterprises to meet the energy needs of 400 million households (or 2 billion people). I often tell the good news/bad news story about E+Co’s investment history: The good news is that we have invested in 268 clean energy businesses. The bad news is that’s more than anyone else in the world.

The movement suffers from lack of access to capital, just like the enterprises it will serve. While challenging and filled with risks, with the blending of public and private capital, we CAN pursue that first launch of enterprise development in order to reach the 80,000 enterprise mark over the next 20 years. E+Co and others know the risks, the opportunity, and core components of the solutions. There’s no need to re-invent the wheel. The growth of this movement will stimulate investment in the organizations and systems that can deliver the energy cure: the learning platforms, the catalytic seed capital, the market development. Just as health professionals and volunteers, community organizations and governments all reach out with public health programs, vaccinations and treatments, the same coordinated approach to distributing energy improvements can be pursued.

The successful outcome is a well financed and effectively implemented local energy enterprise, built on strong business fundamentals. But, rather than visions of large scale wind turbines and transmission and distribution lines, we also have to see visions of local entrepreneurs and their distribution channels. Part of the cure for the disease of energy poverty may look something like the picture above, the transport necessary for the “last mile” distribution.

Global energy innovation is not a zero sum game. A technology that improves the efficiency of solar panels can be deployed anywhere regardless of who holds the patent and a country that can produce cheaper wind turbines means that more wind power can be installed globally for the same amount of money. Despite the fact that everyone can benefit from global innovation, the spoils are clearly not divided evenly and there are winners and losers at the local level. No country inspires more fear right now regarding who will reap most of the benefits of new developments in clean technology than China, which is clearly playing by some different rules than other countries. Almost every day there is a new report in the U.S. press about how China is unfairly stealing intellectual property (IP) from other countries and using the appropriated technology to compete against the same international companies that gave them these ideas. According to a recent Wall Street Journal article, appropriating foreign IP may actually be part of a coordinated state policy. So how should we think about China’s role in the development of clean energy?

James Fallow presents a fascinating model in the Atlantic Monthly about how the U.S. and China have formed a mutually beneficial relationship regarding innovation in the energy sector. Fallow focuses on “clean coal”, which he argues needs to be a focus of anyone serious about arresting climate change given the facts that the U.S. and China are both the largest emitters of greenhouse gases and the largest consumers of coal. His basic argument is that although a lot of the best innovations are still coming from the U.S., America simply isn’t constructing that many new power plants compared to China. American innovators benefit by having someone actually apply their ideas in a real world context on a meaningful scale and China is the perfect place to do that given the rapid rate at which they are building new sources of power of every kind. The Chinese turn American experiments into real world applications, refine the idea, and the U.S. learns the ins and outs of the new ideas it has developed more rapidly than it would otherwise. Everybody wins.

What makes people more nervous is when China comes up with the big ideas themselves. It was recently announced at a Chinese Academy of Sciences meeting that their government is undertaking a program to build the world’s first thorium-fueled molten-salt nuclear reactors, which many refer to as “clean nuclear” power. Although much of the initial research on generating energy from thorium was conducted at Oak Ridge National Laboratory in Tennessee during the 60s and 70s, the work was largely abandoned in favor of pursuing research on nuclear energy based on uranium. If the Chinese are the first to create working power plants from this technology America could find itself importing much of the technology for clean nuclear in the future from China and paying Chinese companies to use their patents.

Regardless of the degree to which policy makers see China as a competitor or an opportunity, the best response is clear. Continuing to push the envelope of innovation will benefit both individual countries and global energy consumers overall. As one Japanese executive is quoted in the Financial Times as saying, “When we install a new process in China we know that some technical details will inevitably leak out to rivals. So we always have to make sure that when we introduce the latest generation of technology in an overseas plant we are working away on the next generation in our research laboratories in Japan.” Whatever else is done to protect countries’ and companies’ intellectual property, the only way to stay ahead of the game is for everyone to do all they can to continue coming up with new ideas and technologies.

The final weeks of 2010 have seen a flood of attention directed towards biofuels. NPR had a three part series highlighting some of the challenges of ethanol including how it raises food prices, although many people would describe U.S. support for ethanol as more about agricultural policy than energy policy. Biofuel company LS9 raised about $30 million in new funding and Pike Research released a report predicting a 20% increase over the next six years in biomass related capital investment, which includes biofuel and energy products.

Probably the most significant announcement however was that the European Commission (EC) is looking at reevaluating the environmental benefits of biofuels over conventional sources of energy for transportation. In a report issued last week the Commission took a close look at what it refers to as the effects of indirect land use change. The basic concept is that as agricultural land in some areas is converted to fuel oriented crops new land will be needed for food production. The clearing of new land has a carbon impact and depending on where the new land comes from, for example if someone cuts down rainforest in Indonesia in order to create new agricultural areas, the negative carbon impact of opening food production in new areas could substantially offset the positive effects of using biodiesel.

The EC adopted two connected goals in 2009 of a 10% share for renewable energy in the transport sector and a 6% reduction in the greenhouse gas intensity of fuels used in transport. This study throws into question the degree to which biofuels should be the renewable energy source of choice to help meet the greenhouse gas reduction goal for the transport sector. Surprisingly, the report makes no mention of third generation biofuels from algae, which are supposed to be able to generate 30 times as much energy per acre as land crops, as a possible way to minimize these land use challenges. Perhaps this will be addressed in the six month impact assessment the EC is planning as a follow on to this study in order to figure out whether it needs to change its renewable energy and fuel quality directives. It will be interesting to see whether this report or any follow on assessments have an impact on how other countries incorporate biofuels into their energy policy planning.

No matter how good your cleantech idea is, without money you are not going to be able to turn your dream of using expired milk to power your car into a reality. The financing system is broken for most businesses right now but innovative ideas in the energy space face their own special set of hurdles. A lot of electronic ink has been spilled this year trying to explain and come up with possible solutions to the cleantech financing problem and I thought this would be a good time for a review of some of the better ideas from 2010 in this area.

The Valley of Death:The Wall Street Journal, Bloomberg New Energy Finance, and numerous blogs have all been writing about the financing “valley of death” facing cleantech startups. The basic idea is that VCs are reasonably good at funding high risk technology ventures between a few million and a few tens of millions of dollars but when it comes time to scale up for a large scale demonstration or manufacturing facility VCs usually aren’t able to invest the $100s of millions needed to take the company to the next level. Banks won’t lend to businesses that are as risky as many of these companies and the whole IPO system is currently broken. Many Silicon Valley VCs that thought investing in cleantech would be akin to investing in online tech companies are now realizing that both the expertise needed and the exit scenarios for these companies are significantly different from what they had experience with in the past and are now pulling back from the sector. So how can cleantech startups make it to the other side of the financing valley?

Government vs. Market Solutions: There is a debate about the degree to which government should get involved vs. letting the market place resolve this financing gap. The Fiscal Times has a good story about the ways that the U.S. government is trying to help cleantech companies get access to capital. Included in the stimulus package is funding for loan guarantees that, although they do not provide money directly to energy focused startups, makes it possible for them to get money from other sources. Tesla probably would not have been able to undertake its IPO without a $465 million loan guarantee from the Department of Energy. The government can also make investments in alternative energy more valuable through policy decisions that incentivize or mandate the use of clean energy sources.

The main market solution available in the absence of a functioning IPO system or bank lending is acquisition of startups by larger energy companies. However, there aren’t many established market leaders in the cleantech space that can serve an Apple or Facebook like function of scooping up promising young upstarts. The obvious candidates with deep pockets and an appetite for acquisitions are the big oil companies like ExxonMobil and Chevron but some people argue that they are mainly interested in alternative energy for public relation reasons and have little interest in going all the way with new technologies that will interrupt their existing business models. Utilities make sense as buyers for certain kinds of new technologies although entrepreneurs and investors are often disappointed when they pay a small multiple of what is referred to as EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization), which is how normal businesses are valued, rather than the much higher valuations given to tech startups based on what a revolutionary idea might be worth.

Revolutionary Technologies: Serial entrepreneur and influential cleantech investor Vinod Kholsa has an article in the December issue of Foreign Policy arguing for increased investment in revolutionary technologies. He thinks that investing too much in today’s technologies that are an incremental improvement in terms of efficiency will leave us with an overhang of large scale infrastructure that will not be a significant enough improvement to stave off serious climate change. Therefore, we should hold off on large scale changes of infrastructure and have governments invest more in swing for the fences ideas through entities like the Advanced Research Projects Agency – Energy. Coming from anyone else I would think this idea an excuse for inaction in the near term but Kholsa has a record that can’t be ignored of effectively pushing the envelope on innovation.

Financing and Solutions to Energy Poverty: Looking at the financing challenge from a completely different angle The New York Times has a great Christmas Day article about energy poverty in Africa. Although a significant market is developing for renewable energy solutions that can help people that are off the main power grid, one of the big constraints is that African companies cannot get the finance to develop new products in this area or import existing products in large quantities from other countries. The Times notes that “a $300 million solar project is much easier to finance and monitor than 10 million home-scale solar systems in mud huts spread across a continent.” The business model for off the grid power renewable energy in developing countries is still being developed and this is an issue Ideas on Energy will be following closely.

So as we go into the new year, what are your predictions for what is going to happen in cleantech finance? Will we see more IPOs? Will bank lending unfreeze for the sector? Will the big energy companies swallow all the smaller players? Or will we become more reliant on government assistance and policy? Whatever happens, 2011 in going to be a big year for new ideas in the energy sector and entrepreneurs are going to be looking for new ways to get money to turn those dreams into our new energy future.

Competitions with cash prizes are increasingly being seen by philanthropies, businesses, and governments as a way to spur innovation towards social goals. This trend is moving out of the U.S. and Europe to other parts of the world. Today the Zayed Future Energy Prize, based in Abu Dhabi, has announced the top six finalists to compete for the 2011 Prize. It might seem strange that an oil rich state in the Gulf is focused on promoting alternative energy but Abu Dhabi has been particularly forward looking in thinking about the future of energy. Abu Dhabi is home to Masdar City, a $22 billion planned community that is aiming to be carbon neutral and serve as a hub for renewable energy and clean technology companies.

According to the organization’s website, “This annual award celebrates achievements that reflect innovation, long-term vision and leadership in renewable energy and sustainability.” The winner will receive $1.5 million and two runner ups will get $350,000. The finalists are:

Amory B. Lovins, the Chairman and Chief Scientist of the Rocky Mountain Institute in Colorado, for his work on “integrative design” for energy efficient buildings. Lovins describes “integrative design” as a powerful and globally applicable new tool for shifting rapidly from oil and coal to efficiency and renewables.

Barefoot College, the only fully solar electrified College in India, for training woman in rural areas to contribute to solar energy development. The college believes the very poor have every right to have access to, control, and manage and own the most sophisticated of technologies to improve their own lives.

E+Co, an investment company based in New Jersey, for its pioneering clean energy investments in the developing world. E+Co supports and invests in small and growing clean energy enterprises in developing countries that impact climate change and energy poverty.

First Solar, solar modules manufacturer based in Arizona, for its commitment to solar energy and the development of more efficient thin film solar modules. First Solar has developed an innovative photovoltaic technology focused on affordability as well as sustainability and is the preferred module supplier for major PV projects globally.

Terry Tamminen, CEO and Founder of 7th Generation Advisors, for his work in developing renewable energy solutions in California. For more than 20 years, Tamminen has developed, implemented and replicated effective renewable and sustainable energy solutions by using California as a proof-of-concept model, then scaling up to larger markets within the US and internationally.

Vestas, a Danish manufacturer of wind turbine technology for its work to bring clean energy to developing countries. For over 30 years, Vestas has been introducing innovative ideas to promote clean, renewable wind power as one of the world’s mainstream power solutions. They are relentlessly committed to establishing wind as a large-scale, sustainable alternative to oil and gas.

Imagine H2O is running a great competition for startups that will reduce the amount of energy needed to move and treat water and waste water. Dealing with energy and water issues in an interconnected way is vital to solving problems in both areas. During congressional testimony last year on the nexus of energy and water it was noted that “nationwide, water and wastewater treatment and distribution combined require about 3% of the nation’s electricity. In California, where water is moved hundreds of miles across two mountain ranges, water is responsible for approximately 15% of the state’s total electricity consumption.” Conversely, because of the water required for the production of electricity, “Most Americans do not realize that they use more water turning on lights and running appliances each day than they do directly through washing their clothes and watering their lawns.”

Winners of the prize will receive $100,000 in cash, business and legal support, and access to a network of partners, customers and financiers to help bring their ideas to market. The organization recently announced the finalists for the 2010 prize. They are as follows:

Ok that might be a bit of an exaggeration, but Tom Friedman makes a strong case in today’s New York Times that the U.S. Military is leading the way in developing and deploying green technologies. Small economy cars start looking more attractive than an SUV to the average American consumer when gas goes above $4.00 a barrel but the military is even more heavily incentivized to think about cutting its fuel consumption since in Afghanistan it pays about $400 per gallon, has one person killed or wounded per 24 fuel convoys it runs, and spends about $100,000 per person per year in fuel costs. A $10 increase in the price of a barrel of oil raises fuel costs for the Air Force by about $600 million. Friedman discusses a number of efforts to replace conventional fuels with biofuels for trucks, planes, and ships.

The view from inside the Pentagon isn’t quite as simple as Friedman makes it out to be. In an email from a Pentagon official published by The Danger Room blog, the official notes that even if the army powered all of its Humvees with maple syrup rather than gas they would still need a supply chain to get the maple syrup from where it is produced out into the field. Additionally, there are lots of suppliers of oil out there. It may go up or down in price but it is always available from multiple sources unlike biofuels made from algae or mustard seeds. Although it is a worthwhile social goal to have the military move to less environmentally harmful alternative fuels, from a narrow security point of view the most important thing may be improving the efficiency of military fuel and power consumption overall.

That being said, it won’t be surprising if the military leads the way to the future for the civilian world in coming up with new ways to power our planes, trains, and automobiles. Although in an age where the Pentagon is seen as being a technological laggard compared to the rapid pace of change in personal computing and consumer electronics, it is important to remember that the military was the first to develop and deploy the technologies that gave us radios, satellites, and the internet. Hopefully the mad scientists at the Defense Advanced Research Project Agency can put the finishing touches on a peanut shell fueled hover craft in time for the next conflict.